Has The Competition Watchdog Slipped His Leash ?

by ukcivilservant

The Sunday Times’ OIiver Shah argued last weekend, that CMA Chair (and ex-politician) Andrew Tyrie’s “fingers were all over” recent decisions to “fire a blunderbuss at the accounting industry and a torpedo at the £14bn merger of Asda and Sainsbury’s”.  I am not so sure.

There is no doubt that the CMA Chair has a greater ability to target the authority’s resources than had some of his predecessors.  This is because the CMA subsumed both the Office of Fair Trading – which decided which cases needed investigation – and the Competition Commission – which was a purely reactive body, judging only those cases referred to it by the OFT or other regulators.  But he has to be careful.  An enthusiastic targeting of a particular company or industry, followed by an adverse decision, would be bound to be challenged in court as clearly biased.

Oliver Shah reports that the big four accountants “are thinking of demanding a judicial review” following the recent firing of the CMA blunderbuss.  However – maybe surprisingly, maybe deliberately – the CMA had not been asked by Ministers to carry out a full two year Market Investigation which could have led to enforceable decisions.  Instead, it merely carried out a faster, less formal Market Study whose recommendations are accordingly less robust, and are for HMG to consider.  M’learned friends may correct me, but I can’t see that the CMA took a decision that was JR’able. If (as Oliver Shah suggests) “Tyrie and friends are shooting from the hip”, this is more a reflection of the nature of their study than any apparent bias.

And it would have been more surprising, I would have thought, if the Sainsbury’s/Asda merger had been allowed to proceed, and not blocked. Again, I can see no obvious evidence that “the decisiveness bore Tyrie’s hallmark”, as alleged by Oliver Shah.

Like Oliver Shah, I welcome the CMA’s willingness to take hard and unpopular decisions when this is necessary, and its Chair has an important role in encouraging this.  But its decisions must be based on hard fact and robust economic argument.  Andrew Tyrie will come a cropper if  he seeks to impose his personal views on his experienced and skilful CMA colleagues.

Martin Stanley
Editor Understanding Regulation